WASTE SERVICES, INC. - 10-Q Quarterly Report

		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets as of September 30, 2004 (unaudited) and December 31, 2003	2
	Unaudited Condensed Consolidated Statements of Operations for the three months and nine months ended September 30, 2004 and 2003	3
	Unaudited Condensed Consolidated Statement of Shareholders’ Equity for the nine months ended September 30, 2004	4
	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2004 and 2003	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	37

	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults upon Senior Securities	38
Item 4.	Submission of Matters to a Vote of Security Holders	38
Item 5.	Other Information	38
Item 6.	Exhibits	38
Signatures		39

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the Quarterly Period Ended September 30, 2004

	or

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from to

Delaware	01-0780204
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

			September 30,		December 31,
			2004		2003
ASSETS			(Unaudited)
Current assets:
	Cash and cash equivalents		$	3,404	$	21,062
	Restricted cash		-		14,433
	Accounts receivable (net of allowance for doubtful accounts
		of $2,442 and $620 as of September 30, 2004 and December 31, 2003, respectively)	50,784		26,999
	Prepaid expenses and other current assets		17,604		29,649

		Total current assets	71,792		92,143

Property and equipment, net			124,201		74,521
Landfill sites, net			170,278		117,541
Deferred income taxes, net			2,370		1,135
Goodwill and other intangible assets, net			326,173		163,380
Other assets			22,994		22,278

		Total assets	$	717,808	$	470,998

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Accounts payable		$	32,308	$	12,074
	Accrued expenses and other current liabilities		36,754		25,401
	Short-term financing and current portion of long-term debt		1,163		172,280

		Total current liabilities	70,225		209,755

Long-term debt			275,507		3,130
Accrued closure, post-closure and other obligations			9,327		8,791
Cumulative mandatorily redeemable Preferred Stock (net of
	discount of $9,799 and $13,558 as of September 30, 2004 and
	December 31, 2003, respectively)		60,455		48,205

		Total liabilities	415,514		269,881

Commitments and contingencies (See Note 10)

Shareholders' equity:
	Common stock of Waste Services, Inc. $0.01 par value; 500,000,000 shares authorized;
		89,284,107 and nil shares issued and outstanding as of September 30, 2004
		and December 31, 2003, respectively	893		-
	Additional paid-in capital		318,536		-
	Treasury stock of Waste Services, Inc. at cost, 500,000 shares as of September 30, 2004
		and nil as of December 31, 2003	(1,235)		-
	Exchangeable shares of Waste Services (CA) Inc., no par value; 7,602,604 and
		nil shares issued and outstanding as of September 30, 2004
		and December 31, 2003, respectively	27,201		-
	Common stock of Waste Services (CA) Inc. no par value; nil and 68,338,828
		shares issued and outstanding as of September 30, 2004 and December 31, 2003,
		respectively	-		215,395
	Options, warrants and deferred stock-based compensation		27,727		25,828
	Accumulated other comprehensive income		20,298		15,952
	Accumulated deficit		(91,126)		(56,058)

		Total shareholders' equity	302,294		201,117

		Total liabilities and shareholders' equity	$	717,808	$	470,998

			Three Months Ended September 30,					Nine Months Ended September 30,
			2004			2003		2004		2003

Revenue			$	94,615		$	34,748	$	217,558	$	91,310

Operating and other expenses:
	Cost of operations		68,427			22,915		153,043		59,939
	Selling, general and administrative expense
		exclusive of stock-based compensation	16,335			7,321		41,712		18,842
	Stock-based compensation expense (benefit)		386			1,462		(648)		1,285
	Severance and other related costs		2,709			-		2,709		-
	Settlement with sellers of Florida Recycling		(8,635)			-		(8,635)		-
	Depreciation, depletion and amortization		9,712			3,808		22,993		10,599
	Foreign exchange loss (gain) and other		21			83		(352)		440

Income (loss) from operations			5,660			(841)		6,736		205
Interest expense			5,681			1,514		24,263		4,501
Changes in fair value of warrants			(532)			-		(111)		-
Cumulative mandatorily redeemable preferred stock dividends and
	amortization of issue costs		4,535			3,858		12,844		6,056

Loss before income taxes			(4,024)			(6,213)		(30,260)		(10,352)
Income tax provision			1,695			908		5,033		574

Loss before cumulative effect of change in accounting principle			(5,719)			(7,121)		(35,293)		(10,926)
Cumulative effect of change in accounting principle, net of provision
	for income taxes of $132 and $256 for the nine months ended
	September 30, 2004 and 2003, respectively		-			-		225		518

Net loss			(5,719)			(7,121)		(35,068)		(10,408)
Deemed dividend on Series 1 Preferred Stock			-			(33,551)		-		(54,572)

Net loss attributable to Common Shareholders			$		(5,719)	$	(40,672)	$	(35,068)	$	(64,980)

Basic and diluted loss per share:
	Basic and diluted loss per share attributable to common shareholders
		before cumulative effect of change in accounting principle..	$		(0.06)	$	(1.06)	$	(0.41)	$	(1.76)
	Cumulative effect of change in accounting principle		-			-		-		0.01

	Loss per share - basic and diluted		$		(0.06)	$	(1.06)	$	(0.41)	$	(1.75)

	Weighted average common stock outstanding - basic and diluted		96,854			38,447		85,484		37,181


															Options,
															Warrants and		Accumulated
		Waste Services (CA) Inc.			Waste Services, Inc.			Waste Services (CA) Inc.							Deferred		Other					Total
		Common Stock			Common Stock			Exchangeable Shares			Additional		Treasury Shares		Stock-Based		Comprehensive			Accumulated		Shareholders'
		Shares	Amount		Shares	Amount		Shares	Amount		Paid in Capital		at Cost		Compensation		Income		Deficit			Equity

Balance, December 31, 2003		68,339	$	215,395	-	$	-	-	$	-	$	-	$	-	$	25,828	$	15,952		$	(56,058)	$	201,117
Sale of common shares and warrants		13,400	49,126		-	-		-	-		-		-		2,552		-			-		51,678
Common shares and warrants issued																						-
in acquisitions		14,837	80,856		-	-		-	-		-		-		-		-			-		80,856
Exercise of options and warrants		311	1,253		-	-		-	-		-		-		(212)							1,041
Deferred stock-based compensation		-	-		-	-		-	-		-		-		(441)		-			-		(441)
Migration transaction		(96,887)	(346,630)		87,657	877		9,230	33,022		312,731				-		-			-		-
Conversion of exchangeable shares		-	-		1,627	16		(1,627)	(5,821)		5,805		-		-		-			-		-
Settlement with sellers of Florida Recycling		-	-		-	-		-	-		-		(1,235)		-		-			-		(1,235)
Foreign currency translation																						-
	adjustment	-	-		-	-		-	-		-		-		-		4,346			-		4,346
Net loss		-	-		-